UK living standards drop to lowest on record

Lazy eyes listen


The Office of Budget Responsibility (OBR) reported on Wednesday that Britons are facing the greatest drop in living standards since records began in the 1950s, as well as the highest taxes since World War II, as the economy grinds to a halt this year.

The report predicts that real household disposable income, a measure of real living standards, will fall by 5.7% between fiscal years 2022-23 and 2023-24.

“While this is 1.4 percentage points lower than forecast in November, it would still be the largest two-year drop since records began in 1956-57,” according to the report.

The OBR noted that a surge in energy and consumer goods prices triggered inflation, which is now above nominal wages and has resulted in a historic fall in disposable incomes, adding that “real living standards are still 0.4% lower than their pre-pandemic levels.”

According to projections, living standards will not return to pre-pandemic levels until 2028, and the tax burden will be the highest since World War II.

The UK’s tax burden “continues to reach a post-war high of 37.7% of GDP at the forecast horizon in 2027-28, including the highest ratio of corporation tax receipts to GDP since the tax was introduced in 1965,” according to the watchdog.

Despite government claims that the country is on track to avoid a recession, the British economy is expected to contract by 0.2% this year.